Our existing incentive systems give us bad buildings, but performance-based contracting is starting to evolve.
by David Bainbridge
e know a lot about building well, so why are buildings so costly, energy wasting, expensive to maintain, unhealthful and ugly?
The problem, like most resource issues, involves perfectly perverse economic incentives that encourage almost everyone in the building process to do the wrong thing. Small but important incentives make it most profitable for the designers, builders and installers to make inefficient buildings. This has been compounded by poor training in schools, both architecture and engineering, and government subsidies that artificially reduce the cost of energy, water, and building materials. Ignorant consumers allow builders to continue to build awful buildings.
The following are ten key problems that are major contributors to poor building practices. Of course, they aren't the only problems.
Subsidies cost us $45 billion per year for nonrenewable fuels, not counting environmental costs. This, plus the separation of users from production costs, encourage poor design. A bad building will increase energy demand in August at the peak use period. This can cost $5,000-$10,000 per kilowatt, but the architect or engineer doesn't pay it other utility customers do. If energy costs reflected real costs, electricity might cost 2-4 times as much. This would make use of solar energy and climate resources an integral part of all designs. If the price of energy was the real price, everyone would do the right thing without regulation.
If we buy a car or computer, we get a massive operators manual. Yet, when we buy a house we don't get a homeowner's manual. Why not? Architects, engineers, bankers and developers often have limited education on building sustainability. Designs are often based on antiquated rules-of-thumb that are no longer appropriate. The Title 24 energy codes are inadequate and minimal, representing perhaps 24 percent of what could be done. Managers of existing buildings often assume the energy bill is fixed and immutable (perhaps in the hundreds of thousands of dollars a year) while firing low-paid maintenance staff to save money (tens of thousands a year). The San Diego City Schools energy retrofit now underway is expected to cut the energy bill in half. This could be done with the 4 million square feet of City-owned property as well.
The developer is usually forced into making minimal initial cost the key goal without considering life cycle costs or comfort and productivity. Speculative building also leads to universal averages that will work with a wide range of users but don't fit anyone well.
The lighting engineer may design lighting for minimal installed cost, without considering possible use of natural daylight (determined by the architect's window choices) or the cost of cooling to offset lighting heat. The architect may design the building without consulting the mechanical engineer about the implications for natural heating and cooling or daylight. And user comfort and productivity is rarely an issue almost no post-construction analysis is ever done. Teamwork is essential to make buildings better.
Often, little planning is done by the planners or more commonly the engineers who determine the site plan. This can limit options for solar orientation and natural cooling.
Financing pressure is very intense and time lines can be very tight, limiting exploration of alternative solutions. Tax rules on depreciation and investment often encourage minimal planning for energy and maintenance costs which are passed on to users. More efficient buildings with higher initial costs tie up investors money for longer periods, reducing net income. Users are reluctant to invest in efficiency improvements in buildings they don't own.
Percentage based fees, common for architects and engineers, are an incentive for minimal innovation. These are often fixed percentages that encourage continued use of standard details or plans which are acceptable but unoptimized.
Liability fears are common in this litigious society. Engineers may oversize equipment 3-10 times to avoid complaints and lawsuits.
Poor operation and management are commonplace. If no one complains, nothing may be fixed. Limited budgets and support from administrators often make maintenance a low priority. Staff may be poorly educated and commonly do not have access to monitoring equipment or material needed for repair. Institutions often eliminate maintenance rather than cutting staff. Delayed or ignored maintenance of schools has resulted in billions of dollars of damage.
Maintenance cost is rarely considered in development. Frequently, government and private low cost housing and facilities are made with poor materials, minimal overhangs, and other choices that increase life cycle cost.
Ideally, public facilities and additions would be endowed. Dartmouth College, which looks at the long term, requires an endowment for things as small as an outside memorial bench to ensure that it can be maintained and repaired forever with no drain on the general fund.
Performance contracting can offset many of the perverse incentives that now exist. This new method of providing design and services to buildings inverts the usually incentives for waste and encourages more innovative and sustainable design. Design professionals may also increasingly work under these performance incentives, with a base payment plus continuing payments based on savings versus a conventional building's average energy bill. Savings from performance contracting often enable contractors/investors to install new equipment and lighting for a host institution at no cost.
In the future, the building developer may contract with the utility for heating and cooling rather than electricity and gas. It is then up to the utility to meet these demands in the most cost effective manner. Similarly, lighting could be contracted to a vendor that provides lights and maintenance. This would encourage the use of the most efficient and durable lights.
Even such simple components as carpet may be rented rather than bought. BASF has developed a nylon carpet recycling program that makes it possible to close the resource loop with their attractive and innovative 6ix carpets. For a fixed fee, the carpet company is responsible for providing carpet and replacing it as it wears. This provides new incentives to make products last and easy to recycle.
Improved sensors and microcomputer management can markedly increase performance of existing systems and pinpoint problems. These innovations also make performance-based retrofits possible, with an outside contractor doing a major retrofit at no out-of-pocket cost to the client. These new sensors also will make it possible to have readily visible meters. Design, installation and maintenance are paid for by energy and operational savings over several years, compared to a fixed fee based on previous bills.
Remarkable buildings illustrate what can be done by good design A recent 500,000 square foot passive solar, sustainably designed Dutch bank cost no more to build than a conventional structure, but it uses less than one tenth as much energy. Absenteeism is 15 percent lower and the bank business has dramatically increased due to the visibility and success of the building.
The future ENOVA [the SDG&E parent company] headquarters should be similarly innovative. Most buildings could realize similar savings in our ideal San Diego climate buildings should require minimal cooling systems and no heating systems.
It is critical to consider other values of good design, not just energy use. Productivity and health gains typically outweigh energy savings by a factor of 10 to 20. Revised lighting at the Pennsylvania Power and Light drafting office reduced energy use enough to save just $2,500 dollars a year. But productivity increased more than 10 percent and the error rate dropped, saving more than $40,000 a year. Also, sick days declined 25 percent. The net return on investment was a striking 1,000 percent.
David Bainbridge is the coordinator of environmental studies at United States International University. He helped develop climatically adapted planning and building codes for the City of Davis. He has designed and worked on solar buildings and subdivisions for many years and is the author of five books on solar design. He authored the booklet: "Building and Selling the Solar Home" for the State of California and received a special commendation from the California Energy Commission for his work on the passive solar section of the solar tax credits